Retail segment continued to drive credit offtake of all banks in fiscal 2016; NPAs in retail segment fall; Housing finance firms steal a march over banks in home loan segment
As the bad loan pile of corporates rises, small borrowers are keeping credit growth for banks buoyant. And not just that. They are paying loans on time, leading to fall in retail non-performing assets (NPAs) of all banks in fiscal 2016.
For top lender State Bank of India, which has gross bad loan outstanding of over Rs 98,000 crore, the retail NPAs constitute only 0.51% of its total retail loan book.
For ICICI Bank, HDFC Ltd too, the gross NPAs for retail loans were lower in fiscal 2016 over a year ago.
Arundhati Bhattacharya, chairman SBI told dna, "Luckily in our country we have a huge employment on the service side that has held up through the difficult times. This has helped the retail loans. It is also a lot of hard work and process improvement. The same will happen in the corporate side as the economy gets going."
The need for homes, credit cards and unsecured credit is keeping the retail loan book of banks growing.
SBI has retained its position as the largest financier of home loans in India with a 20 % year-on-year growth with loans outstanding of Rs 1,90,552 crore, while HDFC Bank is the largest auto loan financier with Rs 55,579 crore of loans outstanding which includes two-wheeler financing. The new home rates are 9.35% for women borrowers and 9.40% for general category loans. With SBI offering one of the cheapest home loan rates at 9.35% for women borrowers and 9.40% for general category loans and reducing the turnaround time, which was a major issue, the demand continues to be strong in the price sensitive home loan market.
Paresh Sukthankar, deputy managing director, HDFC Bank, said in a media concall last month after announcing the bank's results, "The lender will continue to focus on the consumption demand-led credit needs." Pre-tax earnings in lending to cars and personal loans were robust, growing at 41% over the previous year to Rs 2,264 crore.
HDFC Ltd continues to be the largest housing finance company with loans growing across various geographies. Its portfolio during the expanded the most with incremental home loans growing by 31,800 crore during the year.
ICICI Bank is focusing on growing its retail book higher than the system with an emphasis on home loans.
Meanwhile, competition is growing between banks and the housing finance companies in the home loan segment.
Housing finance companies like HDFC and LIC Housing Finance are taking away the market share of the banks.
LIC Housing Finance has grown higher than banks like Axis Bank and has a higher portfolio than ICICI Bank, once the market leader for mortgage loans.
Sunita Sharma, managing director and chief executive officer, LIC Housing Finance, said in an analyst concall, "HFCs have taken away the market share of banks. Secondly as far as the individual market share of the banks is concerned, in the overall outstanding loan segment that does not seem to have meaningfully changed in the last four or five years. Especially I am talking of the very big names in this segment, some of the largest ones. It has marginally come down."
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